Thursday, March 28, 2024

Volatility holds farm sales back

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Good quality farms across all sectors continue to sell very well but the market doesn’t have a good guide on the second tier market because of lower sales activity.
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“There’s not many second tier properties being sold to allow us to test where that part of the market is,” Real Estate Institute rural spokesman Brian Peacocke said.

“We think the volatility in market returns is causing some vendors to question the timing of when to put their properties on the market and that a significant number of farms are for sale at the right price.”

Some vendors were holding out for a price ahead of the marketplace and buyers were increasingly cautious, with indications parties were entrenched at a 5% to 10% price gap.

Compliance issues, including “healthy rivers” rules in some areas, were a factor, with buyers very careful with due diligence.

There appeared to be a good number of dairy farms available in Taranaki and Southland.

Taranaki had had good turnover at prices ranging from $43,000/ha to $59,000/ha, Peacocke said.

There had been one “exceptional sale of an exceptional farm”, a small 52ha dairy farm which sold at $86,500/ha.

Finishing farms were in demand with about 10 of them sold in Southland in the three months to the end of December and consistent sales in Canterbury and Otago.

However, with dairying having expanded to take over many finishing farms in recent years, there was a general shortage of finishing farms in several parts of the country to meet demand.

Though down slightly from November, the median price for finishing farms had jumped 24% year-to-year, to $29,061/ha from $23,489.

Institute figures showed there were 1742 farms sold during the year ended December 31, just over 2% fewer than a year earlier.

Dairy farm sales fell by 28% and grazing farm sales by 15%.

Year-on-year the median price for farm sales fell to $27,774 from $28,120 but on the institute’s All-farm Price Index there was a 4% rise for the year. The index adjusted for differences in farm size, location and farming type but the median measure did not.

The difference was quite technical, Peacocke said. He focused on the Index measure as being more relevant for the market.

The market was stronger in the December three-month period compared to the three months to November 30, with the median price up 5.4% and the All-farm index up nearly 9%.

For dairy farms, the median price slipped to $46,397/ha from $47,385/ha in November but was 17% up on the December 2015 figure of $39,690. 

On the institute’s Dairy Farm Price Index, the lift was 9% above November levels but only 1.9% up on the December 2015 figure.

As was the case in previous seasons, the December figures reflected solid activity during the spring, with an easing in the month of December, in part because of the shorter pre-Christmas selling period, Peacocke said.

Nearly all regions had more sales than in the November three-month period but only seven had more sales than in the December 2015 equivalent period.

Otago had the biggest increase, followed by Wellington then Canterbury.

As usual, grazing properties had the biggest share of sales in the December three-months, at 31% of the total, followed by finishing farms at 27%, dairy farms at 14% and horticulture blocks at 12%.

The value of grazing farms was down 32% on year-earlier figures, to $11,290/ha from $16,656/ha.

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